September 9, 2020

Ignoring Low Student Loan Rates Could Be Costing You — Here’s How Refinancing Can Help

Ignoring Low Student Loan Rates Could Be Costing You — Here’s How Refinancing Can Help

Our goal here at Credible is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders, all opinions are our own.

Don’t overpay on your student loans

Private student loan interest rates have fallen dramatically, which means your current interest rate might be costing you. By refinancing your student loans, you could qualify for a much lower interest rate — and save yourself from paying more on your student loans than you need to.

Take a look at this chart to see how drastically rates have dropped:

Why you should refinance today

Refinancing lets you consolidate all or part of your student loan balance into a new private loan.

When you refinance, you could get:

  • A lower interest rate, which could reduce your overall cost
  • A lower monthly payment, which could reduce the strain on your monthly budget

If you refinance right now, you might qualify for a historically low interest rate. Don’t wait — check your rates today to make sure you have the best deal on your student loans.

Keep in mind that if you refinance federal student loans, you’ll no longer have access to federal programs, such as income-driven repayment, deferment, and student loan forgiveness.

It also might not be a good idea to refinance right now as interest and payments on federal student loans have been suspended through Dec. 31, 2020.

Where should you start?

Student loans can be overwhelming, but refinancing them doesn’t have to be. That’s why Credible’s here to help. We let you compare rates for FREE and as a bonus:

  • It can take just 2 minutes
  • Checking prequalified rates won’t impact your credit score1
  • You can compare multiple lenders at once to find your perfect fit

The student loan refinancing companies in the table below are Credible’s approved partner lenders. Credible will receive compensation if you use Credible’s marketplace to obtain a loan from these lenders. Our compensation does not affect placement on the table below.

You can compare prequalified rates from all of them by filling out a single form:

How much $$$ refinancing can save you

In the table below, we show how a borrower repaying the average graduate school debt of $84,300 over 10 years at 6.22% interest — the average student loan interest rate for grad school loans in recent years — could save:

  • $22,656 by refinancing into a 5-year variable-rate loan2
  • $8,686 by refinancing into a 10-year fixed-rate loan2

No matter which term the borrower chooses, they’d save thousands on their loan repayment — and if you refinance, you could, too.

  Monthly payment Total interest charges Savings
Existing loan (6.22%) $945 $29,129 N/A
5-year variable (2.95%) $1,513 $6,473 $22,656
10-year fixed (4.48%) $873 $20,443 $8,686

According to an analysis of a sample of more than 17,000 student loan refinancings facilitated by the Credible marketplace in June 2020:

  • Rates on 10-year fixed-rate loans averaged 4.48%, down 26% from a July 2018 peak of 6.05%
  • Rates on 5-year variable-rate loans averaged 2.95%, down 37% from a September 2018 high of 4.68%.

However, keep in mind the amount you save will be dependent on your specific situation, and you could wind up paying more over the life of your new loan under certain circumstances.

Find out if refinancing is right for you

  • Compare actual rates, not ballpark estimates – Unlock rates from multiple lenders in about 2 minutes
  • Won’t impact credit score – Checking rates on Credible won’t impact your credit score
  • Data privacy – We don’t sell your information, so you won’t get calls or emails from multiple lenders

See Your Refinancing Options
Credible is 100% free!

1 To check the rates and terms you qualify for, Credible or our partner lender(s) conduct a soft credit pull that will not affect your credit score. However, when you apply for credit, your full credit report from one or more consumer reporting agencies will be requested, which is considered a hard credit pull and will affect your credit.

2 Average refinancing rates by month are based on analysis of a sample of more than 17,000 student loan refinancings facilitated by the Credible marketplace, during June 2020. Click here for more information about the analysis. Variable-rate loans can rise and fall with benchmark interest rates. Savings from the refinancing calculation does not attempt to predict how rates on these loans could change over time. The savings calculation above assumes the rate will remain the same throughout the life of the loan, which is unlikely in practice. The calculations also assume that users will make payments on time, and that there will be no prepayments.

About the author

Ignoring Low Student Loan Rates Could Be Costing You — Here’s How Refinancing Can Help

Ashley Harrison

Ashley Harrison is a Credible authority on personal finance who enjoys helping people become debt-free.

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